Three "SUPER" Important Tips That Traders MUST KNOW to Avoid A Huge Loss in Forex
Here are the three things that if you don't do it, your trade will be hard to make profit.To get more news about XM, you can visit wikifx.com official website.
For new traders, if they dont do these 3 things, they will have difficulties to trade in forex
Knowledge is integral for traders to MAKE PROFIT in forex.
Besides, knowledge is a necessity for traders to AVOID LOSSES.
Thus, learn is a must and NEVER BE DISCOURAGE. Always remember, knowledge is everything...
CHOOSE CURRENCY PAIR WITH THE MOST SOLID RESPONSE.
On average, we are offered with approximately between 20 and 40 currency pairs for trading (depending on which broker you use) and this does not include in the index and commodity markets.
The major mistake that continuously repeated by many traders is that, when they open the graph either on the computer or phone, they will trade the first pair that appear on the screen straight away without analysing the important criteria of that pair.
Before you analyse, do some market scanning first. Observe all the currency pairs offered to you. If there are 30 pairs offered, you should take a quick look at the market conditions for all the pairs offered to you.
It is like you walk for a 'window shopping' before you make a decision to shop at the mall.
The aim is to enable you to see the market condition as a whole whether it is more on “trending” or “sideways” markets. Thereof, you will get an idea of what techniques you will use that are suitable to the market of that day.
In addition, the entry techniques for sideways markets should not be the same as for trending markets. Hence, the first step that you should take is to decide on what technique you will use to get that entry at that particular moment.
Make a currency pair filter and divide it into 2 categories.
Place the currency pairs that move within the same price range (sideways) in one category and the other category is for currency pairs that move in the form of trending.
If most of the currency pairs move in the form of sideways, look for the clearest sideway. Find the pair with the thinnest body and the shortest shadow. This will make you easier to detect the breakout clearly when the graph exits the price range.
Indeed, this technique will direct you to use the BREAKOUT approach for entry.
However, if the market is moving in the form of trending, look for the clearest trending. Please refer to the 3 points below together with the diagrams for reference.
I. The distance from 1 wave to another wave is almost equal.
In the diagram below, try to observe each of the price peaks formed. From these prices, there is the highest price peak that leads all the highest prices.
Notice the distance between the highest peaks seems to be almost equal.
This shows that the market is consistent to make a reversal around the same period.
II. Graphs make a significant reaction when they touch a price zone.
For entry, if you are looking for an opportunity based on the price action, focus on the pair which its rejection is clear and frequent.
Obviously, when a graph is nicely touch on a price point, it will inverse quickly. It wont move slowly or keep delaying. If it move slowly around that price, then the rejection at that price is unstable.
III. The contact price must be more than 2 times.
We can say things that happen “frequently” only when it repeats itself for at least twice.
Therefore, look for a pair which its reactions frequently occur as shown in the diagram below.
Although the forex market is open 24 hours a day, it is fundamental for traders to know when exactly the best time to trade.
Choose to trade at the active time so that the market condition in which you are trading is not affected by speculation disturbance.
Based on my observation for many years, I found that the market movements are often unresponsive or inaccurate when the time is near to the opening of worlds major markets such as the London Open (3.00 pm; Malaysia time) and New York Open (8.00 pm; Malaysian time).
Hence, your trading hours should be focus only on the active time zone between 3:00 pm to 7:00 pm and 8:00 pm to 12:00 pm.
During the winter, the best active time zone is between 4:00 pm to 8:00 pm and 9:00 pm to 1.00 am.
Avoid trading an hour before the world's major markets open because their movements are often unresponsive. At this time, your trade is vulnerable to high risk of loss.